Commercial Real Estate in Castroville: Merritt Street, the Community Plan and County Zoning

By Matthew Martinez, Founder, CEO & Managing Broker, Diamond Real Estate Group. California DRE #01869679.

Castroville’s commercial property lines Merritt Street, the old main street that carries traffic between Highway 1 and Highway 156, with agricultural processing, cold storage and light industrial buildings toward the rail line and the Highway 183 approach. The town is unincorporated, so Monterey County sets the rules through the Castroville Community Plan and its zoning codes. Confirm the zoning string, coastal status and water and sewer capacity for every parcel with the County before relying on this page.

Who controls the parcel

There is no city government in Castroville. Monterey County’s Housing and Community Development department handles planning, and the area is governed by the Castroville Community Plan, which the County incorporated into the North County Area Plan in April 2007, according to Planning Commission Resolution 08038. That resolution records the Board’s General Plan amendment (Resolution 07-102) and a statement of overriding considerations for traffic impacts (Resolution 07-101).

Castroville straddles the coastal boundary. The plan’s state environmental filing shows that adoption required changes to both Title 21, the inland code, and Title 20, the coastal code, plus an amendment to the Local Coastal Program with the Coastal Commission as a responsible agency. A 2007 staff report noted that non-coastal areas could proceed independently of the coastal pieces. In practice, a Merritt Street site in the North County Non-Coastal Area is appealable to the Board of Supervisors, not the Coastal Commission; a coastal parcel adds coastal permit and appeal steps.

Water, sewer, storm drainage, street lighting and street maintenance come from the Castroville Community Services District, formed in 2008 when LAFCO merged the former Castroville Water District (created in 1952) with another agency.

Castroville zoning for commercial, industrial and mixed use

District	Intended uses	Notes
MU-C Mixed Use (Community Plan)	Housing on the same site as commercial, office or public uses	15–30 units/acre under the plan. Applied along the Merritt Street Corridor
LC Light Commercial (Ch. 21.18)	A broad range of light commerce serving nearby neighborhoods	Shops and offices by administrative permit; restaurants, hotels, service stations by use permit. 35 ft, 50% coverage
Industrial districts	Light industry and ag-related operations	The plan’s New Industrial area targets about 40 light industrial parcels; confirm the mapped district
Coastal (CZ) districts	Commerce or industry inside the coastal boundary	Title 20 and coastal development permits apply

The plan’s final environmental document describes a buildout of about 403 acres, roughly 1,655 homes, about 50,000 square feet of commercial space, 40 light industrial parcels and 77 acres of parks, plus a commuter rail station. Treat those as planning targets, not entitlements.

In LC, a change of commercial use within a building needs no permit if the nature and intensity of use stay the same. Retail, offices, convenience markets and banks under 5,000 square feet need an administrative permit; restaurants, auto uses, theaters and hotels need a use permit. Lots over one acre, multi-use projects and subdivisions generally need a General Development Plan approved by the Board. Housing in LC is allowed by use permit only if its floor area does not exceed the commercial floor area. Some older Merritt Street parcels were mapped LC-Z before rezoning to MU-C, so read the current map, not an old title report.

Merritt Street and the five opportunity areas

The Community Plan’s final EIR listing names five opportunity areas: the Merritt Street Corridor, Cypress Residential, the Commuter Train Station, the North Entrance and a New Industrial area, plus infill on vacant and underused lots across town. The 2007 staff report says land uses and densities were set for each opportunity area and that design guidelines and development standards were to be adopted into Title 21.

The Merritt Street Corridor is where mixed use is expected. At 10860 Merritt Street, the Cynara Court project combined 40 affordable units with a community room and 750 square feet of retail or office space, and a citizens advisory committee reviewed its design for plan consistency. A more recent example on Tembladera and Speegle Streets, a self-storage building with a ground-floor office and an upstairs unit on MU-C land, needed a use permit and design approval, according to its 2024 environmental notice.

Flooding, water supply and the sloughs

Flood elevations. Much of Castroville sits low, between the Tembladero and Moro Cojo sloughs and the Salinas River. For the Cynara Court site, Resolution 08038 cites a base flood elevation of 12 feet and required finished floors at least a foot above it, with roughly 20,000 cubic yards of fill. The 2024 self-storage project also proposed about 16,000 cubic yards of imported fill. Budget for fill and elevation certificates.

Water. The CSD’s water page reports 2,145 connections and about 780 acre-feet a year from three production wells, mostly from the 400-foot aquifer, with an arsenic treatment system on Well No. 5. Resolution 08038 notes that projects were measured against a near-term water limit of 108 acre-feet a year. Ask the CSD for a will-serve letter before you commit.

Slough maintenance. The 2007 staff report added plan policies on historic resource review, fiscal neutrality and upkeep of the Tembladero and Castroville sloughs. Projects along the slough may be asked to dedicate land, as Cynara Court did.

Transfer tax, business tax and property tax

Lodging tax. The County applies a 10.5% transient occupancy tax on hotels, motels and owner-rented homes in unincorporated areas, including Castroville.

Transfer tax. The County Recorder collects documentary transfer tax at recording, and there is no city layer in an unincorporated town. Confirm the amount on the escrow estimate.

Property tax. A change of ownership generally triggers Proposition 13 reassessment, and CSD charges may appear on the tax bill.

Due diligence that matters in Castroville

Start with our commercial due diligence checklist, then add:

Confirm whether the parcel is coastal or non-coastal, and whether Title 20 or Title 21 applies.
Read the current zoning string (MU-C, LC or industrial) and the opportunity area the parcel falls in.
Request a CSD will-serve letter for water and sewer before planning a change of use.
Order a flood zone determination and elevation certificate.
Check whether a General Development Plan is needed for a lot over one acre or a multi-use project.
For agricultural processing or cold storage, confirm truck access and hazardous materials permitting.

Questions people ask

Is Castroville a city?

No. It is unincorporated Monterey County, so the County’s Community Plan and zoning codes apply.

What is MU-C zoning in Castroville?

A Community Plan mixed-use designation that allows housing alongside commercial, office or public uses, at 15 to 30 units per acre.

Do I need a permit to open a shop on Merritt Street?

Usually. In LC, most retail and office uses need an administrative permit, and restaurants need a use permit. A like-for-like tenant change may need none.

Is Castroville in the coastal zone?

Partly. Inland parcels follow Title 21 and appeal to the Board of Supervisors; coastal parcels follow Title 20 and the Local Coastal Program.

Who provides water and sewer?

The Castroville Community Services District, which serves about 2,145 water connections from groundwater wells.

What is the hotel tax in Castroville?

10.5% of rent, the County’s unincorporated rate.

Does Diamond handle commercial property in Castroville?

Contact Matthew Martinez to discuss buying, selling or leasing commercial property in Castroville.

Sources & notes

Note: We did not open the Community Plan text, its development standards or the zoning map, so district names other than MU-C and LC should be confirmed with the County. Water figures are from the CSD’s page as posted.

This page is general information, not legal or tax advice. Last reviewed October 2026 by Matthew Martinez.

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